Shares in Capita fell by more than 14 per cent today after the company warned of a ‘subdued’ outsourcing market and flagged difficulties at its various units.

The firm, which has issued profit warnings this year, said it still expected underlying profits to rise in the second half of the year however.

But it also said that the market for major contracts had remained subdued throughout 2017, particularly in the public sector.

Capita said it had won a new seven-year contract with the Cabinet Office to administer the Royal Mail Statutory Pension Scheme

Shares in the FTSE 250 listed group fell 14 per cent to 400.24p in morning trading.

Capita, which is used by the Government and private companies for outsourcing, said it had won a new seven-year contract with the Cabinet Office to administer the Royal Mail Statutory Pension Scheme for its 400,000 deferred members and pension members.

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It also extended a customer management contract with British Gas to April 2019, the group said.

However, it also warned of several issues ahead.

It anticipated a higher level of ‘contract and volume attrition’ at its Private Sector Partnerships division, which it said could impact performance at the division in 2018.

It also said that, despite ‘encouraging progress’ at its public sector division, a £22million defence contract would not recur next year.

Capita’s IT services division also saw some improvement, thanks to cost cuttings, but the group said it expected the profits of this division to be slightly lower in the second half compared to the first half of the year as a result of the non-recurrence of a £9million one-off supplier settlement.

Capita, which is one of the UK’s biggest employers, issued a string of profit warnings in the second half of last year after it took on more work than it could profitably handle.

New chief executive Jonathan Lewis, who arrived at Capita this month to replace Andy Parker, said he aimed to ‘focus the business and allocation of capital and resources on the markets which offer the best growth prospects'.